GREED CONTINUES TO LURE EVEN IN GOOGLE TIMES

Case study

Last month, I met a client ( farmer by profession ) in Baramati ( 60 kms from Pune ) & during our conversation, he explained his view on investing & where he invests his money.

He has been investing and buying land in his village and the neighbouring villages using majority of his savings and in the process, he has accumulated a decent land bank. He also shared that though he has a decent land bank, most of the time he faces a liquidity crunch as the capital is stuck in the form of land.

I shared the concept of Mutual fund with him and what kind of returns one can expect when invested for a longer tenure. During our conversation, seeing his body language I understood that he had something going in his mind, which he wanted to share with me. So, I paused and asked him if he wants any clarification or if he has any question.

This is what he told me:

He shared that many times during the year he borrows money ( for working capital ) from his relatives & friends and pays an interest ranging from 15% to 18 %. He has also recently borrowed money at 24% ( this time the amount is Rs 10 Lac )?& he is planning to invest in a finance company in Pune (Triv… Finance) & has been promised a return of 3% on a monthly basis.

The Question he asked me was, "here I have an investment opportunity offering me 3% return per month on my capital & you are telling that you have a investment opportunity which will generate approx. 12.62 % returns that too when invested for long term."

So... Why should I invest with you?

When we discussed further about this investment option, he mentioned that he got to know about this scheme from his neighbour ( also a farmer ) who initially invested 5 lac in Dec 24' and in Jan 25', he invested another 25 lac with the same company. The reason for this increase in investment was that the neighbour had received his 3% monthly return in Jan 25' as committed & he plans to increase his investment to 1 Cr by year end, so that he can stop farming and get regular income from this investment with the finance company in Pune.

This was the reason my client was planning to invest 10 lac with this Pune based finance company.

?In return I asked him few more questions (my client’s responses are highlighted)

1. Did you understand where your money will be invested by this finance company: ?No
2. Do you know what business this company was into, which gives the such huge returns: No
3. Have you checked the location of this company's office and how long they have been in business: He told me the location and that he had personally not visited the office
4. On what basis have you planned to take a loan of Rs 10 Lac & invest that amount with this company: My neighbour has received the 1st interest payment in Jan 25' & he increased his investment by another 25 Lac in Jan 25'. So I am also investing Rs 10 Lac.

I requested to meet the neighbour if possible. While my client was a bit hesitant at first, he agreed to arrange the meeting.

When we met the neighbour, I asked him the same set of questions & the answers were very similar.

My client was surprised with the response of his neighbour & decided to travel to Pune to get the answers to the questions I had asked.

Next day, I got a call from this client and this is what he told me :

1. He met the employees of the finance company and after asking around a bit, he understood that the money of those employees was stuck & some of them had not even received their salary & the respective interest for last 3 months.
2. The Manager had not reported to office from the last week & was also not reachable.
3. There were few more customers (who were waiting to meet the manager), as they too had not received the interest for last 2 months.

The client thanked me for the questions I had asked him & for being adamant to meet his neighbour.

We met the same day & he started his investing journey with us, by opting to invest in Equity mutual fund via SIP.

Summary

• Greed continues to be the main reason why majority of people lose their capital
• People bargain for 10 rupees with a vegetable vendor, but don't invest time to know the details when it comes to investing a large sum of money
• Having the right person to advise you, plays a big role in protecting and growing your capital
• People continue to invest a big sum of money in such schemes, basis recommendation from a friend/ relative even now, without doing any research. This is when majority of people own smart phones & have GOOGLE
• To know where not to invest, is of utmost importance in our wealth creation journey

Even though we are in an Age of information, the issues which persisted a 1000 years back, still persists because of Greed and Fear.

Having the right advisor is KEY to success in your wealth creation journey & where not to invest also plays an equally important role

Why Mutual Funds Sahi hai ?

• Well-regulated
• Professionally managed
• Helps in diversification
• Option to invest in the top companies in India and Abroad
• Decent returns in long run
• Liquid
• Tax benefit in case of ELSS
• Flexibility to invest in small or large sums
• Absolutely transparent

Don't let anyone deceive you with promises of high returns on your hard-earned money. Choose & Invest wisely.